Technical Analysis by Vistabrokers

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Vista Brokers: Euro Dropped Lower Prior to ECB Meeting

On Wednesday, the single currency continued to move in a downtrend, reaching new lows against the US dollar and other major currencies. Vista Brokers analysts say that it was mainly due to releases of Services PMI in some countries of the euro zone. In another situation, the response to such data would not be so stormy, but not before the ECB meeting, which, according to market expectations, will disclose some details of the ambitious program of quantitative easing realization.

Thus, in Spain the PMI index for the services sector in February went down from 56.7 to 56.2 against the expected growth to 56.9. In Italy, analysts had expected growth from 51.2 to 51.8, but the index dropped to 50. In France, the index remained at the level of January meeting with expectations. In Germany, analysts expect that the rate will remain unchanged, but it fell from 55.5 to 54.7. And finally, in the euro zone the index fell from 53.9 to 53.7.

While statistics was published in different countries, the EUR / USD continued to fall. Even retail sales data for the euro zone, which came much better than expected (1.1% vs. 0.2%) could not stop its decline as well as ADP non-farm employment change index, which came weaker than expected. Thus, ADP data showed that in February, the private sector added 212,000 new jobs, and the forecast was 220,000.

 

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Vista Brokers: Euro Freshes Lows against other Currencies

During early Thursday trading the single currency was declining against all major competitors in anticipation of today's ECB meeting and the official start of the quantitative easing program in the euro zone. Vista Brokers analysts note that the euro has fallen against the dollar to the minimu, since September 2003.

Also the euro is losing ground against the British pound, Swiss franc, Japanese yen. EUR / JPY today is trading at 132.31 yen against 132.58 yen late Wednesday.

Recall that the European Central Bank is preparing to launch a large-scale program of quantitative easing, which involves the purchase of government bonds in the amount of 60 billion euros per month. Analysts expect that after today's meeting rates will remain the same: 0.05% for the key rate and 0.2% for the deposit rate. Such large-scale measures to stimulate the economy have a strong pressure on the euro.

 

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Market Pulse 05.03

On Thursday will be published a lot of important data that can significantly affect the dynamics of currency pairs. Australia has already released statistics on retail sales and the trade balance. Today, two major world central banks at once will announce their decisions on interest rates and comment on the economic situation in accompanying statements. The market will be waiting for this information.

12:00 *** Bank of England Interest Rate Decision - March (UK)
12:00 *** Asset Purchase Facility - March (UK)
12:00 *** MPC Rate Statement - March (UK)

Strong impact on the market (GPB). Although investors do not expect any surprises from the Bank of England, they will listen to its comments carefully. If the nature of statements is optimistic, investors will consider this as a signal that the bank could start to raise rates in the foreseeable future. If the comments seem too neutral or even pessimistic, the reaction can be quite the opposite.

12:45 *** ECB Interest Rate Decision - March (euro zone)
12:45 ** Deposit Facility Rate - (euro zone)
12:45 ** Marginal lending facility - March (euro zone)
13:30 *** ECB Press Conference - March (euro zone)

Strong impact on the market (EUR). At the ECB meeting some interesting details can be sounded regarding to the start of the asset repurchase program which is the part of the program of quantitative easing later this month. So that its results can significantly affect dynamics of the pair.

13:30 *** Unemployment Claims - February (USA)
13:30 ** Continuing Claims - February (USA)
13:30 ** Revised Nonfarm Productivity - Q4 (USA)

Strong impact on the market (USD). Analysts expect that the number of unemployment claims during the reporting week has grown a little more than a week earlier, and the level of labor productivity in the 4th quarter has increased.

15:00 *** Ivey PMI - February (Canada)

Strong impact on the market (CAD). The index is based on a survey of purchasing managers. It shows an improvement or deterioration in comparison with the previous month. Growth rate or exceeded the forecast is favorable for the currency.

 

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AUD / USD. Will the Correction Begin?

In anticipation of the US employment data release quotes of the pair are frozen near a line of a medium-term trend. Meanwhile the latest wave of reduction has already been corrected to 38.2% Fibonacci, which gives us formal grounds to enter a short position if getting additional signals. At the same time, a breakthrough of the resistance line is also not excluded, because at the beginning of February the long-term trend line of the channel was tested, which in any case should not be ignored. Thus, it is dangerous for the deposit to take decisive actions directly before the main event of the month.

It is recommended to closely monitor the pair dynamics, keeping the willingness to buy on the resistance level 0.7910 break. Bears are limited with the mark 0.7624. Within this range boundaries we do not recommend to act decisively.


EUR / USD is Looking for Support and does not Find it

Yesterday's meeting of the ECB is now a history. The market got specifics regarding the asset repurchase program, which is a part of the quantitative easing, start on March 9 (as it became known). Thus, the ECB will buy securities even with a negative yield. The central bank seems to by very optimistic regarding prospects for economic recovery in the region due to low oil prices, as well as considerably reduce of the single currency in the foreign market. Amid this quotes have made several strong movements, close to the upper boundary of the formed channel, but only to give bears a point for new sales. We have the new eleven-year minimum, as well as all the prerequisites for further reduce. The downward movement can get e renewed momentum from today's publication of the US labor market data.

It is recommended to hold short positions, refilling them in the case of the pair rebound from the trend line in order to achieve the opposite channel border. More conservative tactics is to wait for today's statistics from the US Department of Labor and then enter at the break of yesterday's low (1.0986).

 

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GOLD is in Little Demand

Once again the US currency has strengthened in the foreign exchange market and also in the adjacent market where the gold price has made one of the most significant movements in recent months. The reason for the fall was the long-awaited data on the US labor market, which is globally confirmed that one of the world's largest economies is rapidly growing. In a narrower sense, it means that in the near future the Fed can loose all arguments in favor of keeping monetary policy unchanged, and will be forced to go to its tightening. In other words, US treasuries are doomed to yield growth, that in comparison with its lack for gold will force investors to get rid of the yellow metal in favor of the greenback.

So, the price has overcome a support line of a long-term uptrend, which increases the risks of continuing medium-term downtrend in an existing channel boundaries. At the same time, bears were not been able to push the level of support corresponding to the January minimum. It is recommended to hold short positions opened on the break of 1190 and to add to positions on the break of 1163 dollars per troy ounce.


EUR / USD. Speaking about Prospects...

At the moment we see a full wave reduction in boundaries of a downward price channel, which was launched back in the distant 2008. Since then, the market experienced strong fluctuations, because of all possible crises - from the subprime mortgage crisis to the European debt one, whereas now the ECB is launching an unprecedented asset purchase program. Simply put, the European Central Bank switches on its printing press for the benefit of bringing the region's economy in a sense (60 billion euros per month). Will the European QE replicate the success of the Fed's one? That remains to be seen. Meanwhile, the quotes overcame a major support level - the 61.8% Fibonacci correction from the growth in the period 2000-2008. That definitely adds confidence to sellers.

Giving the dynamics of the pair, the next target of bears will be the lower limit of the above-mentioned channel, the achievement of which is very likely to be on an equal value - one euro for one dollar.

 

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GOLD. Price is Close to Strategic Support

We have a breakthrough of the indicated in our previous review level 1163, which means that a decline continues in a downward channel of last few weeks. During this time, the price has dropped from $ 1,300 per troy ounce to current levels, and, apparently, it is not the end. The nearest support level (local minimum of November 2014) is located at 1142, whereas the last bastion of bulls is at 1130. At this level is also the five-year minimum, where in November 2014 buyers have begun their counterattack after failing to break below the correctional Fibo level 61.8% of support from the growth in 2008-2011.

It still makes sense to work in a southerly direction with abovementioned targets. Upon reaching the level of 1130 we should be extra careful because here, as expected, the further dynamics of the instrument may be indicated.


USD / JPY. Buyers Demonstrate Serious Intent

Quotes continue their ascent in the medium-term rising channel, having currently reached its upper limit and freshed the maximum value since July 2007 - at the moment quotes have broken the mark of 122 yen per dollar. According to some economists, dollar in this pair is strengthening relatively slow, but, in our opinion, there are some limiting factors: close completion of the fiscal year in Japan and the corresponding income repatriation by investors and companies. Perhaps, this factor will cease to affect the market at the end of the month, which will give a new impetus to growth. Note that the next week it will be a regular meeting of the Federal Reserve, which market is already beginning to take into account in the form of dollars' purchases.

Quotes fixing above USD / JPY 122.00 will signal to refill long positions, however, to deduct the breakthrough we need more arguments in the context of said rising channel boundary impact, as well as the impact of the resistance level corresponding to multi-year highs of the pair. The probability of the false breakout is high, but if the next wave of growth to be, then it will be large-scale.

 

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AUD / USD. On the Way to Fresh Lows

After Friday's more than optimistic data on the US labor market, AUD / USD has made a significant leap down (at the moment the size of the movement is more than two figures), rebounded from the medium-term trend line in its direction. As a result, today a new six-year low was achieved. It is worth noting that the Reserve Bank of Australia leaders are still interested in further reducing of the national currency in the foreign market – today it was confirmed by the head of the RBA economic forecasts department Kent. As arguments he has named the situation with the current level of unemployment, which, by the way, had reached 13-year highs, and a drop in iron ore, the price of which, in turn, is at multi-year lows. Today, China has reported on industrial production (6.8% yoy against the expected 7.7% yoy), and retail sales, where the growth rate decreased to 10.7% in annual terms vs 11.9% a month earlier.

It is recommended to hold short positions. The global target can be a support line drawn through lows of 2001 and 2008.


USD / CAD Remains Stable, despite Dollar Strength

Quotes have reached the upper limit of a shallow rising channel at 1.2700. In general, the loonie in recent weeks was showing a relative stability against the main beneficiary of the foreign exchange market after the Bank of Canada has set out its wait-and-see attitude to the possible change in interest rates, whereas previously the market had expected a further reduction in one of the next meetings. Among upcoming events that can qualitatively affect the current situation, we can note scheduled for Friday data on the labor market in Canada. Before this data we can count on a relatively quiet trading in a range with a high probability.

It is recommended to wait for confirmation of a rebound from the upper border of the channel by means of oscillators (eg, Stochastic) and to sell in order to achieve its opposite graphical boundary. A Protective stop should be moved behind the current local maximum of 1.2703.

 

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GBP / USD. Reducing Gains Momentum

A next support level for GBP / USD (1.4813 – a minimum since June 2010) has been broken, while the movement of the pair gains momentum, despite a lack of visible weakness of the British pound. It is commonly believed that it is all the fault of the strong dollar, because the US economy is now the most confident among other developed countries and this gives reasons to expect from the Fed some steps of the monetary policy tightening in the near future. Yield is always at the head for investors, so the dollar is now enjoying the highest demand.

Reducing still takes place within a well-shaped channel with a tendency to accelerate, and we should use it for classical work with the trend, but do not forget about the impending Federal Reserve meeting (will complete on Wednesday), which is much expected. This can cause market players to take profits on short positions, which may positively affect the dynamics of the pair. In this case, the 1.4230 mark (minimum since May 2010) remains a long-term target.


USD / JPY. What Games are Japanese Officials Playing?

A direction of long-term and short-term channels is still upward. Tomorrow we expect the Bank of Japan meeting, which may surprise the market (this has happened more than once), especially after a number of high-ranking officials have repeatedly voiced a new rhetoric in their interviews with the media, as well as in public speeches. According to this rhetoric, the BoJ will no longer expand the asset repurchase program. Moreover, the current exchange rate is acceptable, but a further drop is undesirable due to increased cost of imports and consumer activity reducing.

It is recommended to be out of the market until BoJ meeting results will be published and its head Haruhiko Kuroda will end the following press conference. If the accompanying statement will not contain harsh statements to stabilize the yen, growth within the existing channel may continue. Otherwise, we expect the correction to the lower medium-term channel boundary to the level of 120 yen per dollar.

 

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GBP / USD. It is Better to Stay out of the Market

GBP / USD has returned above a significant support level of 1.4813 (2013 minimum) which has been overcome on Friday. Prices are climbing to an upper border of a descending channel, and sellers may likely use this situation soon. However, it will unlikely happen until tomorrow's Bank of England meeting minutes publication, from which the market will receive the information regarding the power balance in the Bank's direction. Namely, it will be clear how many members actually voted for keeping interest rates unchanged. Also some details of the meeting may be very interesting.

It is recommended to fix results of open positions and wait for the publication of above mentioned minutes. We should also note that tomorrow results of the Fed meeting will be announced, and it will clearly affect the dynamics of the pair. So, given risks of increased volatility amid the low liquidity, there is every reason to stay out of the market tomorrow.


EUR / USD. It is Time to Rest

Having reached a lowest level of more than 12 years (1.0460) on Friday, the euro is gradually restoring against the US dollar. At the moment, the pair is at 1.06, and there is few reasons for this decrease in bears' activity. Among them is achieving of a long-term downtrend channel, history of which dates back to a record high of the pair in July 2008. It is likely that some market players will prefer to fix their current results on open positions here, at least until tomorrow's FOMC decision announcement. As expected, details of the FOMC meeting can be interesting, because no one believes that the regulator is ready for concrete steps in the form of rates hike right now, but the Fed should start to prepare the market for its further decisions. It is likely, that today ZEW indexes and the February consumer price index in the euro zone will have some influence on the market.

We will analyze an accompanying statement, that will be published after the FOMC rate decision tomorrow and consider a particular scenario for future EUR / USD dynamics. Meanwhile, it is recommended to close short positions.

 

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Vista Brokers: RBA Meeting Minutes Publication Put Pressure on Aussie

On Tuesday, the Australian dollar has dropped after the RBA monetary policy meeting minutes publication. Currency is trading at 0.7631, compared with 0.7645 shortly before the release.

Vista Brokers analysts note that the minutes made clear that the central bank is likely to continue to cut interest rates this year, but cautiously. While the RBA takes a pause, wishing to see fresh statistics after rate cuts in February. But the way to further easing of monetary policy is open, and the Reserve Bank believes these measures are appropriate for achieving the sustainable growth.

Recall that the RBA has cut its key interest rate to a record low of 2.25% in February. Then, in March, the rate value was retained, although investors have expected further cuts. Analysts remain confident that in 2015 the Reserve Bank of Australia will continue to stimulate the economy, as GDP growth slows and unemployment increases.

 

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Market Pulse 17.03

Today the Bank of Japan, which never tells the time of its publications in advance, publishes a decision on interest rates, data on the annual rise in monetary base and comment on monetary policy. The Japanese controller will also hold a traditional press conference. The Reserve Bank of Australia has already published its monetary policy meting minutes.

10:00 *** ZEW Economic Sentiment - March (Germany)
10:00 ** ZEW Survey (Current Situation) - March (Germany)

Strong impact on the market (EUR). The economic sentiment indicator shows the difference between the number of optimists and pessimists among financial experts. This indicator is closely monitored by markets, and can have a significant impact. Forecasts are optimistic regards this index as well as regards the index of the current situation.

10:00 ** ZEW Economic Sentiment - March (euro zone)
10:00 ** Final Consumer Price Index - March (euro zone)
10:00 ** Final Consumer Price Index - Core - March (euro zone)

Moderate impact on the market (EUR). It is expected that the slowdown in inflation in February was 0.3%, while the core consumer price index has risen slightly. Forecasts for the ZEW economic sentiment index are also optimistic.

12:30 *** Manufacturing Sales - January (Canada)

Strong impact on the market (CAD). Volumes of manufacturing sales may be an early indicator of acceleration or deceleration of economic activity. Growth is favorable for the currency, but in January, analysts expect a fairly strong slowdown, so that the effect of the indicator may be negative.

12:30 *** Building Permits - February (USA)
12:30 ** Housing Starts - February (USA)

Strong impact on the market (USD). The US real estate market has not pleased investors yet, as the labor market has, and expectations on the number of issued permits, and laid foundations are not too optimistic. However, the data can still surprise us.

 

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Vista Brokers: EUR/USD is Waiting for a Guide for Directional Movement

On Monday, EUR / USD was fluctuating in a fairly narrow range, trading above the 1.0500 mark. Vista Brokers analysts say that at the moment the pair is waiting for a guide to continue directional movement. It may get such a guide today from data on ZEW indexes in Germany and the euro zone, as well as the February inflation report in the currency union. However, much more likely that a new starting point will be a FOMC meeting on Wednesday, which is called the event number 1, not only for this week, but for the whole March.

On the one hand, investors feel a disturbance before the meeting, because their hopes for a rate hike in June may not materialize. Amid such sentiments dollar, which in the past couple of weeks has strengthened with confidence against its competitors, is now losing its ground. The weakness of the dollar has led to the fact that on Monday major currencies rose versus greenback. Stock and commodity markets were also able to recover.

However, on the other hand, the growth of the euro against the dollar is still limited, even with the disturbance about the upcoming FOMC meeting and positive outlook for ZEW indexes. An important role is played by the ECB's quantitative easing program, which has started last week. The European Central Bank said that in the first week of the program it was purchased assets in the amount of 9.751 billion euros of public sector bonds and 3.754 billion euros of asset-backed securities.

 

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GOLD. Rhetoric Determines Trend

On the eve bears have "knocked in" a nearest support level (1142). Here they were met, but not banished away. It is likely that today, this level will be crucial in the context of the future dynamics determining. Though it will be after the Fed confirms or confutes ideas that market participants and relevant experts think it should announce today. Now all of them are practicing in predicting of the FOMC accompanying statement text, excluding or adding words, but only the Fed itself will set the record straight. It is likely that it will happen not at once, but during the press conference with Janet Yellen.

A main market strategy as for gold is to analyze the Fed's rhetoric, and if it would indicate impending steps aimed at monetary policy tightening, it makes sense to sell the yellow metal with the first target at 1131.77 (five years minimum). If it will not happen, then the above-mentioned level may become a foothold for a counter-offensive of bulls.


USD / CAD. Bulls Demonstrate Seriousness of their Intentions

As judged by a current pair dynamics, buyers remain at a crouch start before the Fed meeting. It is telling that at the same time, trading run within an upward channel, close to six-year highs. However, as they say, everything can change, so we should not act actively prior to said events (or better, also for some time after them).

One of logical decisions in this situation would be to put a pending order to buy at 1.2822 with a target of 1.3063. Looking ahead, we note that in the case of its achievements and the subsequent passage, a target value will be a 61.8% Fibonacci retracement (1.3450) of the total decrease in 2002-2007.

 

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GOLD. It is Dramatic, but is it Effective?

As it was expected, the results of the Federal Reserve meeting gave market players new food for thought. A reaction was predictable, since the tone of the statement, as well as a little modified targets for economic growth and inflation were not so hawkish, as market had expected. This reduce expectations regarding an imminent tightening of monetary policy and supports gold as a reaction to the US currency sales. However, the quotes are still in the medium-term downtrend channel that formally does not give reasons for purchases.

In the current situation it would be better to wait for further progression of events, so as the market dynamics will show us the best tactic. Thus, only a break of yesterday's daily high and consolidation above the resistance line may give reasons for purchases. If the price goes back under pressure, confirming another rebound from the trend line, sails with targets at 1142 and then at 1131 (five years minimum) per ounce will be priority again.


USD / JPY Bounces from Support Line

As it was expected, yesterday's Fed statement has led to a strong reaction in the market. Thus, the Fed dropped the word "patient" from the statement in terms of its monetary policy normalization (which generally gives the market a signal that a rate hike is around the corner), but the market was waiting for more rapid changes in the context of progressive improvement in the labor market. However, in order not to give investors a reason to buy greenback like mad once again, the Fed has signaled that the US economy still has some problems. That's why terms of the target inflation level achieving were moved to 2017. Also, a situation in employment will be monitored on a permanent basis. However, we can not say that for USD / JPY this caused irreversible effects compared to other major pairs, where the damage was higher. Thus, quotes have broken a support line of a short-term trend, than reached a medium-term support, and here the initiative was intercepted by buyers.

As a base conservative scenario it is recommended to wait for a current upward impulse correction before opening long positions. A first purchase target can be 122.00, where is the maximum of July 2007.

 

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EUR / USD. We Prefer to Stay out of the Market

A major currency pair is showing signs of stabilization after amplitude fluctuations that followed the Fed meeting results announcement. Note that dollar sales had stopped at a correctional Fibonacci level 61.8% near 1.1040, and after it quots have already come down by about 400 points. Now the market is at a crossroads, as there are reasoned arguments, both for purchases and for sales. So, on the one hand, we have a difference in monetary policies of the ECB and the Fed, the first of which only begins a long journey called "quantitative easing", while second is going to increase interest rates soon (as the market expects). On the other hand, the euro was declining for the last 9 months, and it is likely, that the currency has already offsetting the value of the abovesaid factors.

It is recommended to stay out of the market until we will get important trading signals.


USD / CAD. Market is Quiet prior to Canadian Data Release

Last days fluctuations, when the pair has firstly fallen by three and a half figures, and then bulls won back most of lost positions, make us to think seriously about the risks. However, it should be noted that fluctuations still occur within the previously formed trading channel and only its frames overcoming will mark the beginning of a new trend. Today, during the US trading session (12.30 GMT) we expect quite important statistical publications in Canada, which will give an opportunity to predict the future dynamics of the pair. As expected, retail sales in January fell by 0.7%, while the February consumer price index increased by the same 0.7%.

We should not underestimate the potential market reaction to these publications. In the case of positive data bears can once again be proactive, leading quotes to a repeatedly tested line of support in the area of 1.2450. On the other hand, if data will be weak, then we can expect the pair to achieve a six-year high at 1.2833.

 

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GOLD. Quotes are leaving Downward Channel Boundaries

Gold price has overcome an important resistance level (1177.92), we had mentioned in one of our previous reviews, and also a trend line of the last 2 month downward channel. Apparently, bears are not ready to assault a 61.8% Fibo level of growth in 2008-2011, and it is recommended to take profits on short positions "until the circumstances are clarified" amid general deterioration regards the dollar, while a rhetoric of the US Federal Reserve in respect of interest rate policy is more cautious than markets expect. This gives reason to work on counterbalance.

Thus, it is advisable to hold long positions with a primary target at 1205 (38.2% correctional Fibo level of the whole decline wave in January-March). If the price returns to the abandoned channel boundaries we should consider the position closing and wait for new signals.


USD / CAD Provides New Opportunities for Buyers

Friday economic data (which caused a surge in volatility) on Canada remained behind, leaving USD / CAD with significant losses. Thus, despite quite optimistic consumer price index data (0.9% instead of the expected 0.7%), core retail sales (excluding car sales) completely failed. Thus, this index has decreased by 1.8% in January after the previous level of -2.0%. So, a rebound from a support line, where quotes have appeared firstly after the Fed meeting results, was corrected to 61.8%, where the price currently has an intermediate support.

At the moment, we have almost formed conditions for purchases. An ascending wave formation with subsequent moving averages overcoming may be a proof of it. In this case, a protective stop should be placed under a local minimum (1.2540). A target of long positions will be a multi-year high at 1.2830.

 

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USD / JPY is Getting Closer to Event Horizon

Bulls still fail to trigger a growth from a trend - the US dollar continues its downward correction amid profit-taking after a prolonged growth. Today we expect inflation data in the US and it will probably be decided in the course of the US trading session to be or not to be a breakthrough of the said support line.

Better than expected (0.2%) data on the consumer price index increase will provide a basis for the pair growth (while purchases should be made only after getting confirmation from indicators). In case of weak data, bears will likely make an attempt to overcome a nearest support level (119.25 - the minimum, which has been reached after the Fed's statement last Wednesday). We must use it, acting accordingly (sale from 119.25), because the scope for the further reduction can not be overestimated.



EUR / USD. Restoring Gains Momentum

The single currency, along with the rest of the the American currency competitors, continues to recover, adding four and a half figures in last ten days. Today, during the European trading session will be published preliminary data on the level of business activity in the services sector, as well as the industrial sector, which might cause a new surge of optimism in the market, because expectations are rather optimistic. Many experts think that these data have the highest predicative function, showing appropriate further changes in the real sector. Currently the pair is moving within short-term upward trend boundaries, which is confirmed by the support line presence, as well as by the fact that quotes continue to be located above the average with period 25, shift 5 (trend indicator), that we use.

It is recommended to buy at the nearest resistance level (1.1042) breakthrough, and then at the next one (1.1096), which is corresponding to an extremum of a descending wave, ended in January, with the target of 1.1380 (the level where the latest wave of decline has started).

 

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GBP / USD. Situation is Heating up

A situation with the pair resembles a wound-up to a limit spring, which is ready to burst soon. Fluctuations amplitude is gradually reduced, which is confirmed by converging lines of graphic consolidation figure "triangle". Today at 9.30 GMT data on retail sales, as well as the quarterly report of the Bank of England, will be published in the UK, and it will likely cause a breakthrough of at least one of the closest price levels, giving us a reason to enter the market in an appropriate direction.

We may talk about a possibility of opening positions in the direction of the triangle's exit only in the case of the level 1.4990 (buy) overcoming, while sales are recommended only when the price will overcome the level 1.4830. In such cases, it is important not to outperform the market, but to be abreast with it.



USD / JPY. Bulls Failed and Retreated

As it was expected, in order to hit important (from a technical point of view) lines and levels of support it was needed a proper reason. Yesterday this reason was (not at once) the release of disappointing data on durable goods orders in the USA. They were particularly important because of the market's sensitivity to statistics, which has increased after the Fed at its last meeting had signaled for its propensity for analysis of upcoming statistical data. This took pressure on world stock indexes (including the US and Asian ones), with which USD / JPY is in a high degree of correlation, and the US dollar. All of this did not leave a chance to bulls, and at the moment we have an avalanche activation of stop orders, which are traditionally located slightly below important support levels.

It is recommended to sell with a target of 118.20, where is a 61.8% Fibonacci correction of growth in January-March.

 

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EUR / USD. End of the Week Expected to be Warm

Generally positive statistics on the US labor market, which has been published on Thursday, as well as a speech of a FOMC member Dennis Lockhart provoked the fall of the pair to an area of a short-term trend support line. It should be also noted that sales started from an important resistance level (61.8% Fibonacci correction of decrease in February-March), where long-term downtrend line also goes. Today, shortly after the opening of the US trading session the National Statistical Service of the United States will publish the final GDP for the fourth quarter of last year, and it is definitely worth attention.

In the context of the observed volatility increase it is recommended to work on a breakthrough of nearest technical levels, but before opening the position, it is better to wait for confirmation from indicators. Thus, purchases are justified in a case of rebound from a support line with a target at 1.1042, while a breakthrough of this line will open the way to achieving a following support.


USD / JPY. In anticipation of the US GDP

Buyers could benefit from yesterday's positive for the dollar events, which could again inspire optimism to the US economic growth and (for investors it is even more important), of course, increased expectations of markets regards rates hike in the near future. As a FOMC member Lockhart said yesterday during his speech, a strong economy gives grounds to wait for the policy tightening this summer. It is not necessary to write off a technical factor in a form of prices rebound from a 61.8% correctional Fibonacci level of an upward trend of January-March of this year.

A formal target of reducing (abovementioned Fibo level) was achieved, and now it is recommended to wait the final US GDP data (they are expected today in 14.30 GMT), before putting a stake on the particular scenario.

 

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GOLD. Goals of Correction are Achieved

A gold price has reached a broken at the beginning of this month support line, but this time from the bottom. Another limiting factor for bulls is a nearby 38.2% Fibo level of a total fall in January-March. Here, prior to weekly trading closing investors were taking profits, and after that quotes moved into an area of a formed with a nearest 38.2% Fibo level support. At the same time a reaction on fundamental statistics on Friday was smoothed, causing only a local increase in volatility, and this when the US GDP data were worse than expected (2.2% vs. 2.4%), and the consumer confidence index was better than expected.

It is expected that buyers' activity will increase on drawing near a level of 1190, which means an actual testing of the abovementioned 38.2% Fibonacci correction. It is recommended to open long positions only after a rebound and getting additional signals from trend indicators.



USD / JPY. Bulls Come to Life

The final US GDP has confirmed a previous estimate (2.2%), disappointing those who hoped for more positive data. This has a short-term impact on the dynamics of the dollar, which fell directly after the publication. But then trading returned into a stable course and in the end of the week, no one dared to demonstrate a proactive stance. There were too many conflicting factors to take risks. While the market pays more attention to some technical aspects, the most influential of which can be called testing and rebound from a 61.8% Fibo level from an upward trend in January-March.

Correction of a first wave of growth that followed a testing of the abovementioned 61.8% Fibonacci level, gives reason to buy on a breakthrough of a top of this magnitude, corresponding to 119.50. Another barrier for growth and at the same a target level may be a lower limit of an overcome few days ago upward channel in a range of 120.10.